Posted by: madkentdragon | May 24, 2012

Where Does the Euro Go From Here?


Another meeting and again no steps forward, it seems the Euro is a mystery that cannot be untangled.

On one side we have the Mediterranean Countries with their insurmountable debt and on the other we have the Germanic Countries with their stoic determination on braving the deficit and managing to live within their budgets.

The Euro was brought about as a trading tool so that all could trade with each other on a level field; unfortunately the origins were so uneven that this was bound to fail.

Several of the Countries could not meet the entry criteria for the Euro but, in their eagerness to gather them all in, these were either fudged over or ignored. Now it has all come back to bite them and the Countries who should not have joined the syndicate in the first place cannot cope.

They have had to pare back their over generous budgets to miniscule amounts and their citizens are either unemployed or on wages that really sit just under the poverty level. Of course the rich are not affected, but are removing their monies from the banks and depositing it into safe havens.

Now it seems the poor do not trust the banks in the debt ridden countries and are also removing their few savings, leaving the banks with very little deposits to help the government. So now governments are borrowing more money or receiving “bail-outs” to pay instalments on monies already owed.

I know I do not have much financial experience – I have no debt and the day I retired I cut up my credit cards and paid off any debts on them – but these “bail-outs” are surely only bigger versions of pay day loans?

Take Greece – no really, please take Greece! This Country was already in debt when it was allowed to join the syndicate and has used its connections to borrow more and more which the banks lent out to people who couldn’t pay it back. Once these banks would have been allowed to go bankrupt and it happened here in the 19th Century; but not in the syndicated Eurozone – so more money was lent to pay the instalments – hang on, aren’t we being told that this type of finance is stupid? Don’t borrow what you can’t pay back.

So why are Countries allowed to do it? Well, it’s because the other Countries are bailing them out and so it shows up on their balance sheets as an asset and they can claim interest with the payments. But what would happen if all the Countries who are struggling stopped repaying their loans?

Would all the other Countries go broke? Would the United Kingdom go broke – sorry be worse off than we already are?

And now the syndicate plus the UK can’t fix this, so where do we go from here?

Anyone fancy swapping 5lbs of potatoes for a cabbage?

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Responses

  1. Love your ramblings, Pat, and I still don’t know what’s going on because whenever anyone says something, someone else contradicts! Common sense seems to have gone out of the window, as usual! Irene

  2. Reblogged this on Daibhidhdeux's Blog.

  3. Just a small point, but I thought, minus North Sea revenues plus stratospheric levels of personal and government debt, the “germanic” UK was already a stoically busted flush fiscally?

    • As the UK is not in the self destructive Euro-Syndicate, I excluded it from the “Germanic” and mentioned it later on in the post.

  4. Well written Pat ~ As Irene said, common sense doesn’t seem to feature anywhere!

  5. Apologies for late reply. Apologies, again. Point taken.

  6. Well said t. You are quite right about the divisions but we can be thankful that we are not in the Euro so if the Bank of England keeps its nose out and lets the £ strengthen we could have an excellent exchange rate into the bargin. But it is our trade that could suffer so we will have to see.


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